Doubt, Inflation Slowing Economic Rebound

On paper, the U.S. economy should be ready to shoot out of the starting blocks like a well-trained sprinter.

Vaccinations have finally slowed the spread of this terrible coronavirus.

The CDC says vaccinated people don't have to wear masks in most places, and we couldn't wait to discard that cloth or paper barrier. Stadiums and fairgrounds are filling with people again, most of them unmasked even if all of them aren't vaccinated.

The weather is getting warmer, our mood is getting brighter and we're getting ready to spend again.

Except we aren't quite committed just yet. Nagging doubt is setting in.

We're easing out of our pandemic cocooning and reluctance, but we haven't yet fully opened our wallets and purses yet. We're having second thoughts about that first big step, whether it's buying a car or house or taking that trip.

The biggest worry is that old bear in the woods, inflation. Consumer prices soared again in April to push the yearly inflation rate to a 13-year high of 4.2%. Almost everything costs more, from tires to toothpaste.

Some price hikes are very noticeable. Meat prices increased 1.5% in April and have risen 4% in the past year. The average price of gasoline has jumped 50% to just over $3 a gallon from $2 a year ago. The average price of a used car topped $25,000 for the first time earlier this year. The soaring costs of lumber are legendary; one realtor said a 4x8 sheet of plywood, the basic component of new home construction or serious remodeling, has tripled since last year.

Shoppers see this, and a bunch of them have slowed down their spending.

The stock market isn't falling, but it really isn't gaining either. It was in an up-and-down cycle for most of May. No one is panicking yet, but no one is singing "Happy days are here again" either. And since consumer spending drives about three-fourths of the economy, not much will happen until you and me and everyone else starts buying more.

The good news is that all of this is probably temporary.

Economists say some degree of inflation was expected as the longdormant economy began to get back on its feet.

After a month or two, they expect that to level off.

If it does, the recovery should really pick up.

Most people are looking for an excuse to spend again and get back to normal life. The rebound should be in full swing when students return to campuses in the fall and back-to-school spending jump-starts stores all over, and then it will really take off. Before you know it, we will be enjoying the best Christmas shopping season in years, and that's a rising tide that lifts all boats.

Frankly, the coming recovery seems like an avalanche that just can't be held back much longer.

But if for some reason that doesn't happen or inflation refuses to go away, somebody's got some explaining to do.

Politically, the party in power usually gets the credit for anything good that happens and the blame for anything that goes wrong.

President Joe Biden and the Democratic majorities in Congress got off to a good start economically with a whopping $1.9 trillion stimulus package that included lots of checks for closed businesses and jobless people - and even people with jobs. That burst of spending - well, borrowing actually - finished off any threat of a worsening recession and allowed the table to be set for this summer's recovery assuming that this summer's recovery actually happens.

If the recovery doesn't kick in soon - or heaven forbid, this year - Democrats will be scorched and go into the midterm elections in 2022 with an even bigger target on their backs.

For now, the momentum has slowed. If it's temporary, the rest of the year could be our country's second version of the Roaring '20s. That is still the most likely scenario, but inflation and consumer doubt need to fade away like the wearing of plastic gloves in stores as in the early days of the pandemic.

Overall, the recovery still seems unstoppable and inevitable unless it isn't.